Luotang Power: Variances Explained (Brief Case)

The primary objective is to explore the concepts of variance analysis in performance from one year to the next and the predictability of contracting counterparts to extract value from contract positions where they can. The general manager of a coal-fired power plant located in central China is reviewing his annual results and needs to explain the reasons for poor performance to his board. The case centers on variance analysis as to how the power plant has performed. Compared with a traditional variance case, there is added complexity due to the nature of the contracting environment of the power plant and the possibility to explore strengths and weaknesses of some contracting structures.